Short answer
Yes, a private mortgage can consolidate credit cards, lines of credit, and other high-interest debt into one payment secured against your home, when a bank has already said no. It usually costs more than a bank product. It only makes sense if the interest saving is real and you have a plan to exit into cheaper financing once your file cleans up.
Why a bank will not consolidate this way
Most banks decline these files on debt ratios, not character. If your existing debt load already pushes your total debt service ratio past what a conventional lender allows, adding a consolidation loan on top makes the ratio worse, not better, in the bank’s math.
A bruised credit score from carrying balances close to their limits compounds the problem. The bank is qualifying the debt you are trying to escape, which is exactly why the door closes.
How a private mortgage does it differently
A private lender is not primarily qualifying your debt ratios. It is qualifying the property and the equity behind the loan.
If there is enough equity, the lender can advance funds to pay out your unsecured balances directly, often at closing through your lawyer. You are left with one secured payment instead of several unsecured ones.
What you are actually trading
Be clear-eyed about this. Credit card debt is unsecured. Nobody takes your house over an unpaid credit card.
A private mortgage is secured against your home. Miss payments on it and the lender can enforce, which in Ontario means power of sale.
You are trading negotiable, unsecured debt for debt that puts your home on the line, in exchange for a lower rate and one payment. That trade is only worth making if the rate saving is real and the spending that created the debt has actually changed.
What it costs
More than your existing mortgage, and more than the debt products you are replacing, at least on the stated rate. Expect an interest rate above conventional pricing, a lender fee and usually a broker fee each calculated as a percentage of the loan, legal fees for both sides, and an appraisal.
Read the full guide for your province, Private Mortgage Lending in Ontario or Private Mortgage Lending in Alberta, where typical ranges for rates, lender fees, broker fees, loan-to-value, and term are set out in full. Every figure varies by file and none of them is a quote.
If the balance is smaller and your existing first mortgage rate is worth protecting, a second mortgage run against those same numbers may cost less than breaking and refinancing the whole thing. Ask your broker to run both.
When this makes sense, and when it does not
It makes sense when the combined interest rate on your unsecured debt is genuinely higher than what the private mortgage will cost once every fee is counted, and when the spending pattern that built the debt has changed. One payment at a lower blended cost, with a defined term, can be the right call.
It does not make sense if the balances simply rebuild. Consolidating debt onto your home and then running the credit cards back up leaves you with both the original problem and a mortgage payment on top of it. A licensed insolvency trustee or a nonprofit credit counsellor can look at whether a formal debt solution costs less than borrowing against your home, and that conversation is worth having first.
Build the exit before you sign
Private terms are short, commonly measured in months, not years. Before you sign, know what changes during that term that lets you refinance into a bank or credit union at ordinary rates: a completed tax year, a repaired credit score, or reduced revolving balances that stay down.
Our Ontario guide sets out what typically has to change before an A-lender will take a file like this. If you cannot describe that plan today, the loan solves this month’s problem and creates next year’s.
Frequently asked questions
Is it a bad idea to secure unsecured debt against my house?
Not automatically, but it is a real trade. You lower the interest cost and combine payments, and in exchange your home becomes the collateral for debt that previously was not secured by anything.
Will a private lender check my credit score first?
Usually they look, but the property and your equity carry more weight than the score itself. A weaker score does not automatically disqualify you the way it can with a bank.
Can I consolidate a mix of credit cards, a car loan, and a line of credit?
Generally yes, provided there is enough equity to cover the payout amounts plus fees. Your broker calculates the total payout required before quoting a loan amount.
What happens if I cannot pay off the private mortgage at the end of the term?
Most lenders will discuss a renewal or extension, usually for a further fee, but that is not guaranteed. Speak to your broker well before the term ends, not after it, so you have options instead of a deadline.